Corvette Wheel Maker Files For Bankruptcy

[Rob]

In light of the recent news development regarding the announced bankruptcy of Amcast Industrial Corp., the company that manufactures the C6 Corvette's wheels, do you think it's possible that other suppliers of Corvette parts could follow down the same path due to GM's financial situation? Why?

Reference Article: http://www.corvetteactioncenter.com/forums/showthread.php?t=77700

[DRTH VTR]

Just my $0.02-
The supplier and the buyer can have a mutually beneficial, and mutually dependent relationship. While competition between suppliers can have a desired effect on price, driving all of the suppliers out of business makes no sense. It sounds like GM knew that the price they were paying for wheels did not cover costs, butthey felt no need to renegotiate an equitable price. Now their supplier is belly up and GM is out of luck. It seems like cutting off your nose to spite your face. Gm is certainly not alone in using a "price is the only factor" approach.

[Dakota kid]

Just my $0.02-
The supplier and the buyer can have a mutually beneficial, and mutually dependent relationship. While competition between suppliers can have a desired effect on price, driving all of the suppliers out of business makes no sense. It sounds like GM knew that the price they were paying for wheels did not cover costs, butthey felt no need to renegotiate an equitable price. Now their supplier is belly up and GM is out of luck. It seems like cutting off your nose to spite your face. Gm is certainly not alone in using a "price is the only factor" approach.

I agree with DRTH

[srs244]

i believe you are losing sight of the fact that chapter 11 is a re-org, not a disolvement. as in the past, they will probably just wipe out their outstanding debt (or pay pennies on the dollar) and show up for work the next day. i would think that they would have a problem if they couldn't find another golden parachute type contract for a major purchaser to absorbe their production output. i doubt they will make it as a supplier of the local BUBBA TIRE AND DISCOUNT SPINNER STORE. it does however afford them the opportunity to renegotiate their current GM contract perhaps to a more beneficial level (although i would doubt that GM would bend over and take a hit).

[blacksharkL82]

I agree with DRTH. Looks like GM is taking the lead from WALLY WORLD.
Screw your suppliers and force them out, if they wont lower thier price after the deal was made.
Ah, the American way, no way! that is the way WM became so big.
Do business with me on my terms, or you are out of busniess!
Sad state of affairs.

[koolaid117]

How many more suppliers can GM afford to lose? Was Delphi's bamkruptcy a Chapter 11 or 13 I don't remember right off the bat. Looks like we will have to all go to the discount cheap junk parts store to find parts and wheels. I certainly agree that all businesses have a right to make money, but as has been said earlier, why cut off your nose to spite your face?? As the Guiness commercial says, "Brilliant!!"

Jim

[Samauriwarrior]

THIS IS AN OLD ARTICLE BUT STILL RINGS TRUE TODAY.


Car Companies Vs. Their Suppliers - It's Fear, Loathing And Contempt 24/7.

Detroit. The longest-running joke in the car business is that car companies really care about their suppliers. That's about as accurate as saying that Michigan leads the nation with its exquisitely maintained roads. No, the fact of the matter is that car companies care about their suppliers only when it's absolutely convenient for them. It has been this way since day one in this business, and whenever I hear or read about auto executives waxing eloquently about their "stable and productive" relationships with their suppliers - I have to laugh out loud, because it's just flat-out bull****. Robert Sherefkin, writing in this week's Automotive News, has two articles about the supplier/car company relationship as it applies to GM. One article is about how GM will prop up ailing suppliers who are "too big to fail." The other is about how GM wants $37 million from Oxford Automotive Inc. over its role in an embarrassing recall of the TrailBlazer/Envoy/Bravada one year ago. Nice "Jekyll & Hyde" routine, right? But, far from being an unusual situation, it's standard operating procedure in the car business.

Let's face it, shall we? If a supplier has a "good" relationship with a car company, it's only because the supplier has managed to come up with an innovation or has a proprietary skill or technology that the car company cannot figure out how to pry loose or copy for their own. In that case, the "relationship" sinks to a level more akin to an uneasy truce than anything else.

The reality of most car company/supplier "relationships" is that they're made up of equal parts mistrust, contentiousness, abuse, utter contempt and flat-out hatred.

From the car companies' perspective, it all begins with a built-in "given" - that somehow suppliers are nothing more than indentured servants at the beck and call of their clients' whims. From the moment people start their careers on the car company side of the equation, it's ingrained that they treat suppliers with contempt. When everything is good, suppliers are referred to as "partners" (or in the ad agency biz, the ludicrous and laughable "marketing partners" moniker), but when things go wrong, the language quickly reverts back to just "suppliers" - with a corresponding sneer detectable in the tone used. Car companies look at suppliers as necessary evils - people who can provide them with something that they either won't do or can't get done themselves. There's no "partnership" anywhere to be found when the chips are down, however. Car companies expect their suppliers to come up with innovative ideas and solutions, and then once they have them, they feel they're justified to do whatever they want with those ideas even if it means handing it off to another, more politically correct supplier - or worse, bidding the project out.

The car company mantra of "cutting costs" doesn't mean eliminating paperclips or the late-afternoon mail runs at headquarters, it means asking a supplier to come up with an innovative idea/solution/part, price it with "minimal" profit going in and then demand another 30% off their quote before it even goes anywhere near a purchasing signoff. Where is the art in sitting there like some low-level government bureaucrat saying, "I won't pay for that" or, "You better figure out how to basically give it to us for free just for the privilege of doing business with us - if you want any more business to come your way"?

And car company executives are feted as heroes for presiding over this behavior? They get labeled as cost-cutting "gurus" by the genuflecting media because they (and their shock troops) go around busting balls all day long and get "results"?

How ridiculous is that?

And they wonder why suppliers are teetering at or going under at every turn? Suppliers are going under because of the years of relentless mistreatment and callous abuse from the car companies they do business with. In the car companies' quest to make their bottom lines look good, the suppliers got hosed every time.

From the car companies' point of view, it's real simple: They want it for nothing, or they want it for free, and if you, Mr. or Ms. Supplier don't like it, they'll rip off your idea/solution/part and dump it into the laps of a supplier who will "play ball" with them. It's ugly, it's nasty, it's reprehensible, it's two-faced, it redefines the term "scumbag behavior," and what's worse - it's everyday reality.

Now, let's look at it from the suppliers' perspective. They build their businesses - some from little mom & pop operations - others from well-run companies that just kept getting bigger and bigger, and they basically go to "war" every day of the week with the car companies. Nine times out of ten, suppliers solve problems and fix mistakes made by people at the car companies who either don't know any better, don't care or who should have known better. Suppliers come up with solutions and innovations that the car companies either haven't thought of - either because their employees were too "busy" or, more likely, were incapable of coming up with a worthwhile thought of their own. And then once these suppliers do all of this fixing, solving, idea-generating and innovating, they price their work at the "suggested" razor thin margins - only to have the car companies turn around and say, "That's good, now cut 30% from your price, and we'll do business."

Let's get this straight. If you're a supplier you come up with the ideas, you do the grunt R & D work, you finance your own expenditures and cash outlays, and then you're supposed to basically do it all for free and say, "Thank you sir - may I have another?"

Nice.

I don't want to read one more story about some car executive who is "incredulous" about the state of their "trusted" suppliers. How he or she is "shocked!" that their loyal "partners" are in such bad financial shape - when the only reason the suppliers find themselves in this predicament is because of the abuse they get from the car companies they work for, day-in and day-out.

Car companies and their executives are masters of the "blame game." It's always somebody else's fault - either the "ingrate" greedy dealers, the parasitical "leech" suppliers, the suspicious media, the brutal competition, and my personal favorite - the always reliable "sun spots" theory, or even the "misinformed" customers out there who just haven't had the lights go off in their heads yet to realize how wonderful these car companies' cars and trucks really are.

The bottom line is that the car companies have wreaked havoc and destruction on their suppliers because of the car companies' pathetic, in-bred attitudes, and their utter disdain for anything and everything except covering their own asses and turning a profit - no matter whose hide that profit comes out of.

The manufacturers have become so incompetent and so out to lunch that it has come down to this: the only way they can eke out a profit is to drain the very life out of their own suppliers - while beating them up every day for good measure. To the car companies, that's just "too bad" and "the way the business is" according to their bureaucratic shock troops in the trenches.

Well, guess what?

Now that the car companies are running out of excuses, running out of dupes in the supplier community who want to put up with their old stale act and running out of someone else to blame for their serial incompetence, they're watching as suppliers drop like flies because - amazingly enough - you can't run a business without any revenue coming in. Who knew?

Fear, loathing and hatred? The car companies are getting exactly what they deserve.

And you'd have to search far and wide to find anyone who even feels remotely sorry for them.

[vee93]

It's awfully scary to learn that the supplier was actually losing money for every C6 wheel they manufactured. Were they so desparate for GM's business that they literally screwed themselves by signing onto a lousy contract? That's bad business right there. And if they get cut off by GM, you know all GM is gonna do is outsource the job to Mexico, China, Canada--anywhere but here.

[Dad]

Vee93

I know it was a long post but go back and read the post before yours. It's the ways business is done all to many times.

Been there, been screwed by the big money Corp. but just once.

[tyrel]

There are a lot of reasons a company will file for chapter 11. Yes their debt ratio sucks, but lots of companies operate on a margin that thin, it just looks funny from the outside because the average person doesn't get to see what kind of salaries the big guys are pulling down. As long as they can meet their debt, a company can operate indefinitely, although it won't make the shareholders happy if stock value doesn't budge. But lots of big companies are like this, tiny stock changes over long periods of time. I suspect the reasons behind their chapter 11 filing may be a mixed bag: perhaps a renegotiation ploy with GM, a fight among the major shareholders and board members, a cry for help to state and/or federal legislators to raise tariffs on cheaper imported parts so american companies can compete. I have a hard time believing that they actually lose money with every wheel they sell to GM, and the fact that they would actually say they do looks suspiciously like a renegotiation ploy, at the expense of shareholders. Let's make everyone angry at GM, which is already struggling as it is. Of course it's obvious what all of this implies, perhaps GM is taking a long hard look at the corvette, like they did in the late 80s/early 90s, and wondering if Chevrolet really needs a flagship car at all.

[Samauriwarrior]

I have a hard time believing that they actually lose money with every wheel they sell to GM, and the fact that they would actually say they do looks suspiciously like a renegotiation ploy, at the expense of shareholders.

The lose money on every wheel but they make it up in volume. :D

[Louis Bartay]

The lose money on every wheel but they make it up in volume. :D

I agree. And please do not buy wheels from Craig at Radical Wheels as he is not a nice person to deal with. AFS has a great Customer Service and better prices.

[ricersvette89]

It's awfully scary to learn that the supplier was actually losing money for every C6 wheel they manufactured. Were they so desparate for GM's business that they literally screwed themselves by signing onto a lousy contract? That's bad business right there. And if they get cut off by GM, you know all GM is gonna do is outsource the job to Mexico, China, Canada--anywhere but here.

Its kinda weird how American auto makers are putting their jobs outside of America but the Japs. (or any other non U.S. car maker) move in the U.S. What's even more weird: the non U.S. brands are getting better while selling at a normal price rate and few rebates. while GM,Ford and other U.S. makers move out and have to give out rebates to keep up while their reps. go down slowly. You can disaprove but thats how i see it.